New evidence, now in the public record, strongly suggests that the Reagan
administration's tolerance of drug trafficking by the Nicaraguan contras and other clients
in the 1980s was premeditated.

With almost no notice in the national press, a 1982 letter was introduced into the
Congressional Record revealing how CIA Director William J. Casey secretly engineered an
exemption sparing the CIA from a legal requirement to report on drug smuggling by agency
assets.

The exemption was granted by Attorney General William French Smith on Feb. 11, 1982,
only two months after President Reagan authorized covert CIA support for the Nicaraguan
contra army and some eight months before the first known documentary evidence revealing
that the contras had started collaborating with drug traffickers.

The exemption suggests that the CIA's tolerance of illicit drug smuggling by its
clients during the 1980s was official policy anticipated from the outset, not just an
unintended consequence followed by an ad hoc cover-up.

Before the letter's release, the documentary evidence only supported the allegation
that Ronald Reagan's CIA concealed drug trafficking by the contras and other intelligence
assets in Latin America. The CIA's inspector general Frederick P. Hitz confirmed that
long-held suspicion in an investigative report issued on Jan. 29, 1998.

Laundry List

But the newly released letter, placed into the Congressional Record by Rep. Maxine
Waters, D-Calif., on May 7, establishes that Casey foresaw the legal dilemma which the CIA
would encounter should federal law require it to report on illicit narcotics smuggling by
its agents. The narcotics exemption is especially noteworthy in contrast to the laundry
list of crimes which the CIA was required to disclose.

Yet, despite reporting requirements for many less serious offenses, Casey fought a
bureaucratic battle in early 1982 to exempt the CIA from, as Smith wrote, "the need
to add narcotics violations to the list of reportable non-employee crimes."

In his letter, Smith noted that the law provides that "when requested by the
Attorney General, it shall be the duty of any agency or instrumentality of the Federal
Government to furnish assistance to him for carrying out his functions under" the
Controlled Substances Act.

But Smith agreed that "in view of the fine cooperation the Drug Enforcement
Administration has received from CIA, no formal requirement regarding the reporting of
narcotics violations has been included in these procedures." [At the time of Smith's
letter, Kenneth Starr was a counselor in the attorney general's office, although it is not
clear whether Starr had any input into the exemption.]

On March 2, 1982, Casey thanked Smith for the exemption. "I am pleased that these
procedures, which I believe strike the proper balance between enforcement of the law and
protection of intelligence sources and methods, will now be forwarded to other agencies
covered by them for signing by the heads of the agencies," Casey wrote.

In the years that followed, "protection of intelligence sources and methods"
apparently became the catch-all excuse for the CIA's tolerance of South American cocaine
smugglers using the contra war as cover. Though precise volume estimates are impossible,
the contra-connected drug pipeline clearly pumped tons of cocaine into the United States
during the early-to-mid 1980s.

Contra Umbrella

Some contra defenders have argued that the anti-Sandinista armies in Honduras and Costa
Rica were not the primary beneficiaries of the narcotics smuggling, that most of the
profits probably went to drug lords with few political interests. Still, over the past 15
years, substantial evidence has surfaced revealing that many drug smugglers scurried under
the contra umbrella. They presumably understood that the Reagan administration would be
loath to expose its pet covert action to negative publicity and possibly even to criminal
prosecution.

According to the accumulated evidence, Bolivia's "cocaine coup" government of
1980-82 was the first in line filling the contra drug pipeline. But other contra-connected
drug operations soon followed, including the Medellin cartel, the Panamanian government,
the Honduran military and Miami-based anti-Castro Cubans. The contra-connected cocaine
also moved through transshipment points in Costa Rica and El Salvador. [For details, see
Robert Parry's Lost History; Cocaine Politics by Peter Dale Scott and
Jonathan Marshall; or Gary Webb's forthcoming book, Dark Alliance.]

Less clear is exactly what the U.S. government knew about the contra-connected drug
trafficking and when. Reagan authorized CIA support for the contra army in mid-December
1981. But the first publicly known case of contra cocaine shipments appeared in government
files in an Oct. 22, 1982, cable from the CIA's Directorate of Operations.

The cable passed on word that U.S. law enforcement agencies were aware of "links
between (a U.S. religious organization) and two Nicaraguan counter-revolutionary groups
[which] involve an exchange in (the United States) of narcotics for arms." The
material in parentheses was inserted by the CIA as part of its declassification of the
cable. The name of the religious group remains secret.

Over the next several years, the CIA learned of other suspected links between the
contras and drug trafficking. In 1984, the CIA even intervened with the Justice Department
to block a criminal investigation into a suspected contra role in a San Francisco-based
drug ring, according to Hitz's report.

In December 1985, Brian Barger and I wrote the first news article disclosing that
virtually every Nicaraguan contra group had links to drug trafficking. In that Associated
Press dispatch, we noted that the CIA knew of at least one case of cocaine profits
filtering into the contra war effort, but that DEA officials in Washington claimed they
had never been told of any contra tie-in. The Casey exemption explains why that was
possible.

After the AP story ran, the Reagan administration
attacked it as unfounded and the article was largely ignored by the rest of the Washington
press corps. But it did help spark an investigation by Sen. John Kerry, D-Mass., who over
the next two years amassed substantial evidence of cocaine smuggling in and around the
contra war. Still, the Reagan and Bush administrations continued to disparage Kerry's
probe and its many witnesses.

Through the end of the decade, the mainstream Washington media also denigrated the
allegations. In April 1989, when Kerry released a lengthy report detailing multiple
examples of how the contra war supplied cover for major drug trafficking operations, the
nation's most prestigious newspapers -- The New York Times, The Washington
Post and the Los Angeles Times -- published only brief, dismissive accounts.

With the end of the contra war in 1990, the controversy faded further into the
historical recesses. The Clinton administration quietly rescinded Casey's narcotics
exemption in 1995.

Crack Epidemic

The contra-cocaine issue arose again in 1996 with an investigative series by Gary Webb
of the San Jose Mercury-News. Those stories traced how one of the contra drug
conduits helped fuel the crack epidemic in Los Angeles.

In response, the major newspapers again rallied to the CIA's defense. They denounced
the series as overblown, although finally acknowledging that the allegations raised during
the 1980s were true. Webb's series also prompted a new investigation by the CIA's
inspector general.

In the first volume of his investigative report, Hitz admitted the CIA knew early on
about contra drug trafficking and covered it up. The report's second volume reportedly
puts the CIA in even a worse light.

The CIA press office acknowledges that the second volume has been completed, but adds
that there is no timetable for releasing a declassified version. "They'll only let it
out if they're pressured," commented one U.S. official.

But the CIA apparently is counting on continued disinterest by the national press as a
sign that there is no need to revisit the issue. That assessment was bolstered on May 7
when Waters introduced the Casey-Smith letters into the Congressional Record and drew very
little media interest in the damaging admissions.

For her part, Waters stated that the Casey-Smith arrangement "allowed some of the
biggest drug lords in the world to operate without fear that the CIA would be required to
report their activities to the DEA and other law enforcement agencies. ... These damning
memorandums ... are further evidence of a shocking official policy that allowed the drug
cartels to operate through the CIA-led contra covert operations in Central America."

Though Waters's comments focused on the contra war, Casey's narcotics exemption could
have had other CIA covert operations in mind. In the early 1980s, the CIA-backed Afghan
mujahedeen also were implicated as major heroin traffickers in the Near East.

But whatever the genesis of the drug exemption, the Casey-Smith exchange of letters
stands as important historical evidence bolstering the long-denied allegations of CIA
complicity in drug trafficking. Worse yet, the documents are evidence of premeditation.